An Aussie has sparked debate after exposing how the tax system unfairly penalises single-income families.
Sydney mortgage broker Leigh Morris posted a skit about what he dubbed the ‘breadwinner tax’, highlighting how two households earning the same total income can face vastly different tax bills.
Under Australia’s tax system, individuals are taxed separately regardless of whether they are married or have children.
As a result, a household where one partner earns $300,000 can pay substantially more tax than a household where two partners each earn $150,000, despite both families earning the same total income.
In the video, Mr Morris questioned why a dual-income household earning $150,000 each would pay about $80,000 in tax, while a single-income household earning $300,000 would pay about $107,000.
Mr Morris role-played as a wife and husband speaking to a tax official.
‘Sorry, so if we both earn $150,000 a year, you’re only going to take $80,000 in tax?’ the wife asked.
‘That’s right,’ the tax official replied.
Sydney mortgage broker Leigh Morris posted a skit about what he dubbed the ‘breadwinner tax’, highlighting how two households earning the same total income can face vastly different tax bills
‘But if I earn the full $300,000 you take $107,000 in tax?’ the husband said.
‘Yeah, me and the boys back at the office call that one the breadwinner tax,’ the tax official responded with a smug smile.
While income tax is assessed on an individual basis, several government benefits are means-tested using combined household income.
Government programs such as the Child Care Subsidy, Family Tax Benefit and the private health insurance rebate all take into account the earnings of both partners when determining eligibility and payment rates.
‘What? So we’re complete f***ing strangers when you’re taxing our income,’ the husband said.
‘But when it comes to paying us benefits, suddenly you assess our entire household income,’ the wife said.
‘Yeah. Me and the boys gave ourselves the afternoon off after coming up with that one,’ the tax official responded.
Mr Morris shared his skit to Instagram where social media users vented their outrage.
Under Australia’s tax system, individuals are taxed separately regardless of whether they are married or have children
Read More
Anthony Albanese set to backflip on controversial tax changes after growing backlash
‘It astounds me that the government are so short sighted on this,’ one wrote.
‘Surely with the government’s love of taxes, they’ve thought ahead enough to see that tax revenue will severely drop in the future if birthrates today aren’t improved.’
‘Tax on tax on tax,’ a second said.
One Nation has advocated for a form of income splitting for couples with dependent children.
The party argues the policy would provide greater support for families where one parent stays at home or works fewer hours to care for children.
It also claims the change would reduce reliance on childcare services and lower government spending on childcare subsidies.
According to One Nation, a family where one parent earns $120,000 and the other earns no income would be around $9,500 a year better off under income splitting.
A couple earning $120,000 and $30,000 respectively would save about $2,000 annually.
The idea has also attracted support from Nationals leader Matt Canavan, who has championed income splitting since entering the Senate and first raised the issue in his maiden speech in 2014.
Canavan has previously argued Australia’s tax system disadvantages family arrangements and discourages parents from spending more time at home raising children.
Canavan has also argued that income splitting could help address Australia’s declining birth rate by reducing the financial pressure on families raising children.
Australian Bureau of Statistics data showed the nation’s total fertility rate dropped to a record low of 1.48 births per woman, well below the 2.1 births per woman generally considered necessary to maintain a stable population without migration.
Critics meanwhile say income splitting would overwhelmingly benefit higher-income households and reduce government revenue.
They also contend Australia’s individual tax system is simpler, more transparent and avoids creating opportunities for high-income earners to minimise their tax obligations.